THE BENEFITS OF INTERNATIONAL FINANCE

When once we have recognized how close is the connection between finance and trade, we have gone a long way towards seeing the greatness of the service that finance renders to mankind, whether it works at home or abroad. At home we owe our factories and our railways and all the marvellous equipment of our power to make things that are wanted, to the quiet, prosaic, and often rather mean and timorous people who have saved money for a rainy day, and put it into industry instead of into satisfying their immediate wants and cravings for comfort and enjoyment It is equally, perhaps still more, true, that we owe them to the brains and energy of those who have planned and organized the equipment of industry, and the thews and sinews of those who have done the heavy work. But brain and muscle would have been alike powerless if there had not been saving folk who lent them raw material, and provided them with the means of livelihood in the interval between the beginning of an industry and the day when its product is sold and paid for.

Abroad, the work of finance has been even more advantageous to mankind, for since it has been shown that international finance is a necessary part of the machinery of international trade, it follows that all the benefits, economic and other, which international trade has wrought for us, are inseparably and inevitably bound up with the progress of international finance. If we had never fertilized the uttermost parts of the earth by lending them money and sending them goods in payment of the sums lent, we never could have enjoyed the stream that pours in from them of raw material and cheap food which has sustained our industry, fed our population, and given us a standard of general comfort such as our forefathers could never have imagined. It is true that at the same time we have benefited others, besides our own customers and debtors. We have opened up the world to trade and other countries reap an advantage by being able to use the openings that we have made. It is sometimes argued that we have in fact merely made the paths of our competitors straight, and that by covering Argentina with a network of railways and so enormously increasing its power to grow things and so to buy things, we have been making an opportunity for German shipbuilders to send liners to the Plate and for German manufacturers to undersell ours with cheap hardware and cotton goods. This is, undoubtedly, true. The great industrial expansion of Germany between 1871 and 1914, has certainly been helped by the paths opened for it all over the world by English trade and finance; and America, our lusty young rival, that is gaining so much strength from the war in which Europe is weakening itself industrially and financially, will owe much of the ease of her prospective expansion to spade-work done by the sleepy Britishers. It may almost be said that we and France as the great providers of capital to other countries have made a world-wide trade possible on its present scale. The work we have done for our own benefit has certainly helped others, but it does not, therefore, follow that it has damaged us.

Looking at the matter from a purely business point of view, we see that the great forward movement in trade and finance that we have led and fostered, has helped us even by helping our rivals. In the first place, it gives us a direct benefit as the owners of the mightiest fleet of merchant ships that the world has seen. We do nearly half the world's carrying trade, and so have reason to rejoice when other nations send goods to the ports that we have opened. By our eminence in finance and the prestige of a bill of exchange drawn on London, we have also supplied the credit by which goods have been paid for in the country of their origin, and nursed until they have come to the land in which they are wanted, and even until the day when they have been turned into a finished product and passed into the hands of the final consumer. But there is also the indirect advantage that we gain, as a nation of producers and financiers, from the growing wealth of other nations. The more wealthy they grow, the more goods they produce want to sell to us, and they cannot sell to us unless they likewise buy from us. If we helped Germany to grow rich, we also helped her to become one of our best customers and so to help us to grow rich. Trade is nothing but an exchange of goods and services. Other countries are not so philanthropic as to kill our trade by making us presents of their products and from the strictly economic point of view, it pays us to see all the world, which is our market, a thriving hive of industry eager to sell us as as it can. It may be that as other countries, with the help of our capital and example, develop industries in which we have been pre-eminent, they may force us to supply them with services of which we are less proud to be the producers. If, for example, the Americans were to drive us out of the neutral markets with their cotton goods, and then spent their profits by revelling in our hotels and thronging out theatres and shooting in Highland deer forests, and buying positions in English society for their daughters we should feel that the course of industry might still be profitable to us, but that it was less satisfactory. On the other hand, it would be absurd for us to expect the rest of the world to stand still industrially in order that we may make profits from producing things for it that it is quite able to make for itself.